Company debt can come about very easily. A few slow months and all of a sudden the debt is a long way beyond the reach of the business owner. If you have company debts that are out of control then give us a call. At Bankruptcy Experts Port Macquarie we are company debt professionals. For a complimentary consultation contact 1300 795 575.
If my business is in difficulty should I contact a liquidator?
Usually when a company owner finds him or herself in an unfeasible financial position they are encouraged by either their financial advisor, their lawyer or even their colleagues to contact a liquidator and place the business into liquidation. Be cautious about this, as the belief is that because you are paying the liquidator they will protect your best interests and assist you to get back on your feet. BUT THIS IS ABSOLUTELY NOT THE CASE!
Liquidators are not on your side …
Although liquidators, administrators and receivers are usually good people, their duty, once they are appointed, is to your creditors (people you owe money to) and to the courts. They are to collect as much money as possible from the liquidated business to pay off these creditors. That’s it. If for one minute you really feel they will look after your best interests, you are sadly misguided.
Once you have signed those documents to appoint the liquidator to your company, that is it! You no longer have any say over the company. The liquidator will do whatever they feel is in the best interests of the creditors and, guess what, in many cases you have just paid for the demise of your own business.
One Business Owner’s Story …
I knew I was in strife when the bank wouldn’t lend me any more against the house. This business has been in the family for years and the thought of losing it was too much. I called my financial advisor and my bookkeeper, and they both recommended me to get a liquidator. They said that’s the only way out. I knew I had substantial debt, but it just seemed like I had no options. My bookkeeper said that because I am paying for the liquidator and that it was going to be a voluntary liquidation that I would be protected. WRONG!
I found some liquidators. They seemed pleasant and competent and they said they would help me as much as they could to work through my financial issues. I had no idea what was about to happen. They seemed to comprehend my situation; I had some cash coming in and a sale of some equipment going through.
The minute I signed the documents the liquidator asked for the keys and that was it. Everything was taken out of my hands, the sale of the equipment was totally taken over, the money I had coming in was gone, they took over everything; it was all gone. The next day my savings account were frozen and what I thought was going to be a beneficial situation turned out to be my worst headache. I lost everything!
What is the best strategy if my company is in difficulty?
There is a solution to handling this situation: PREPARATION. There is plenty you can do to ready yourself before you hand over the control of your business to a liquidator. In fact, much of the stress can be managed in a way that will work for you, not against you. This sounds easy but in fact there is a substantial amount of regulation and many rules in place surrounding this process, so always get some guidance about this. If you are not sure what you should do and just need some suggestions, simply give us a call on 1300 795 575. Bankruptcy Experts Port Macquarie specialises in pre-liquidation strategies.
What if someone else is winding up my company?
If someone is winding up your company like the ATO or a creditor, they will have a liquidator appointed by the courts. You do have some options here, and there is plenty you must know and do to protect yourself. The key here is to get some advice, and involve us as soon as you can in this process. It is that simple. Usually you will receive a notice in the mail or a court order, and if you have one of these give us a call because the longer you disregard this the fewer options you have. Call us at 1300 795 575.
Can I continue to run a business if I have been the director of a company that has been liquidated?
Yes, you can continue to run a business. No, you can not still be the director of the company. This is one of the most frequent questions we are asked. Of course there are rules that need to be adhered to, and you need to ensure you structure things the right way moving forward. Liquidation does not need to be the end of your business activity, as so many people think it is. We can help you do this and rebuild a new life after liquidation. There are choices, but in most cases people simply don’t know what they are. At Bankruptcy Experts Port Macquarie we can explain your options and help you accomplish your goals.
What do I need to do?
Be prepared. Liquidators don’t work for you no matter how much you pay them. Your creditors don’t work for you no matter how much of their bill you pay them. Your friends love you but usually have no idea what they are advising to you. They’ve probably heard that if you want to start again you need to get rid of the company through a liquidator, and it is an easy presumption to make that if you pay a liquidator they will work for you. Please note, THIS IS NOT THE CASE! WE WORK FOR YOU– no one else does. You are our client and we are only interested in securing the outcome you want. For a free consultation call 1300 795 575.
What do we do?
At Bankruptcy Experts Port Macquarie we help you work through your choices. We then help you take the appropriate action. Then we work toward securing the best possible outcome for you and protecting whatever we can. We communicate the right way with your creditors and the liquidator, if needed.
What if I have an ATO Debt?
If you have an ATO debt, don’t dismiss your mail! The ATO will often issue companies Wind-Up Notices or Statutory Demands, or even a Director’s Penalty Notice on you or your company. If this is the case, you must act now! Sometimes communication is all that’s needed, sometimes winding up the company is the answer and sometimes negotiation is required. Whatever is required, we will help you work through a plan, and we support you the whole way.
What If I have received a notice from the ATO ?
If you have received one of these notices YOU MUST NOT PERMIT THEM EXPIRE. Call us as quickly as you receive them and we can assist you work through the options available to obtain the very best and optimal outcome for you. Once we have done an assessment of the business and the circumstance we recommend an action plan, then it is your choice whether you continue from there. Phone Bankruptcy Experts Port Macquarie for a free consultation today at 1300 795 575.
ATO – DIRECTOR’S PENALTY NOTICE
What is critically important is that every director is aware of these changes and the serious nature of them and how they will impact you and your company. If you have an ATO debt then you may be served with a Director Penalty Notice by the Australian Tax Office.
What does it mean if I get a Director’s Penalty Notice?
The aim of a Director Penalty Notice is to make directors accountable for their company’s unpaid ATO debt. As a director, you will no longer have the ability to avoid personal liability for a PAYG ATO debt, which comes with a Director Penalty Notice, if the following applies:
- Your debt is older than three months and or your debt was not reported to the ATO within 3 months of the lodgment date.
- As a director, you may also be liable for your company’s unpaid superannuation liability when you receive a penalty.
- Directors, and associates of directors, may now also be liable for a new personal income tax liability. This will make directors and their associates possibly liable for a company’s unpaid PAYG withholding liability.
Do I have any options?
Yes. If your company has a tax debt or you have received a Director Penalty Notice, it is vital that you secure qualified help, as we have numerous options you may wish to consider. Simply call us on 1300 795 575.
What if I ignore the notice?
There may be important consequences for not abiding by the tax office’s notice; this can include losing personal assets like cars, property or shares, and personal bankruptcy for the company’s debts. In other words, the ATO will personally bankrupt you.
What is a Statutory Demand?
A Statutory Demand is a demand made under 459E of the Corporations Act. This document is not issued by the Court. A Statutory Demand necessitates that the Debtor Company pay a specified amount of money within 21 days from the date of the delivery of the demand on the Debtor Company.
If the debt is questioned or if there are oddities in the document, the company should immediately seek independent legal advice and apply to the Court to set the demand aside on the basis that the debt, then the subject of the Statutory Demand is genuinely disputed. This application MUST be made within 21 days.
What if the Statutory Demand expires unsatisfied?
Section 95(A) of the Corporations Act provides that a company is solvent if it is able to pay its debts as and when they fall due. Accordingly, the test as to whether or not a company is insolvent is that it is unable to pay its debts as and when they fall due.
Under Section 459C of the Act, the company is presumed to be insolvent if a company has failed to comply with a Statutory Demand. Then, the delivery to a Debtor Company and non-compliance with the Statutory Demand will provide “proof,” which is sufficient for a creditor to apply to the Court for the appointment of a liquidator to the company.
Can the Statutory Demand just turn up in the post?
Yes, it could be delivered in person or simply show up in the post as registered mail.
WINDING UP NOTICE.
What is a Wind-Up Notice?
A wind-up notice regularly follows a Statutory Demand. If a company is not able to pay its debts then the Court has the power to wind it up and appoint a liquidator whose duty it is to turn the assets into cash and distribute the cash in the order set out in the Corporations Act. In short, this notice is effectively a letter telling you that on a specific date a liquidator will be appointed by the courts to take control of your company if you don’t pay the debt.
Who can send me a Wind-Up Notice?
The creditor who obtains the appointment of the liquidator and the liquidator take priority in regard to their expenses as do specific employee entitlements. The rest is distributed equally between unsecured creditors.
Will I be personally accountable for my company’s debt?
No. The liquidation of a company does not automatically mean the director will be made bankrupt; however, the process of winding up a company resembles the process of having a person declared bankrupt. Having said that, the ATO can issue a Director’s Penalty Notice any time, so it’s best to act promptly. For a free consultation phone us on 1300 795 575.
What happens if I can not pay the debt within the 21 Days?
A liquidator will be appointed and you will no longer be the director of your company. The court will designate a liquidator who then assumes complete control of your business. All of the customers, bank accounts, assets, cash, money that’s owed to the business and your properties are no longer yours. Put simply, it’s over. The company you have built for many years is no longer yours. All the assets will be sold, your business, shop or factory will be taken control of by the liquidator (they will even change the locks) and your services are no longer required. Every aspect of your company will now be under the administration of the liquidator.
Do I have any options preceding the liquidators seizing my business?
Yes. We offer a free initial consultation to guide you work through this dilemma. Our team of practitioners can save you massive distress. You must act rapidly! Contacting us the day before the liquidator turns up is useless. Get in touch with Bankruptcy Experts Port Macquarie today on 1300 795 575.
Do I have any choices once the liquidators have shown up?
No. The company is no longer in your control.